In a 113-page decision issued earlier today, the United States District Court for the Southern District of Florida (Gold, J.), quashed the famous / infamous decision of the Florida Bankruptcy Court holding the so-called “Transeastern Lenders” liable for fraudulent transfers in connection with TOUSA’s July 31, 2007 financing transactions (the “July 31 Loans”). In re TOUSA, Inc., Slip Op., Case No. 10-60017-CIV/GOLD (S.D. Fla. Feb. 11, 2011). Further, the very strong reversal of the Bankruptcy Court’s findings and conclusions as “clearly erroneous,” in particular as to whether TOUSA’s subsidiaries received “reasonably equivalent value” in exchange for guaranteeing the July 31 Loans, would appear to bode well for the separate appeals (still pending) filed by the so-called “First and Second Lien Lenders” who made the July 31 Loans.
The District Court’s decision was so overwhelmingly opposed to the Bankruptcy Court’s logic and rationale that the Court took the extraordinary step of actually quashing the Bankruptcy Court’s Order rather than adopting the typical procedure of reversing and remanding.
We will provide a fuller update in due course but wanted to rush this out given the significance to the capital markets of the original TOUSA decision.